Docket No. A-2062-10T4.

CAVALRY PORTFOLIO SERVICES, LLC, as assignee of CAVALRY SPV I, LLC, as assignee of RIVERWALK HOLDINGS, LTD, as assignee of WASHINGTON MUTUAL BANK, Plaintiff-Appellant, v. HARRY J. KUMBARIS, Defendant-Respondent.

Superior Court of New Jersey, Appellate Division.

Decided December 7, 2011.

Attorney(s) appearing for the Case

Choi Law Offices, PLLC, attorneys for appellant ( Shayan Farooqi , of counsel and on the brief).

Needleman and Pisano, attorneys for respondent ( Frank Pisano, III , on the brief).

Before Judges Messano and Yannotti.



Plaintiff, Cavalry Portfolio Services, LLC, appeals from judgment entered in favor of defendant, Harry J. Kumburis, dismissing plaintiff's complaint following a trial in the Law Division, Special Civil Part. We have considered the arguments raised in light of the record and applicable legal standards. We reverse and remand for a new trial.

On August 2, 2010, plaintiff filed a complaint alleging it was the ultimate assignee of a consumer credit contract between defendant and Washington Mutual Savings Bank (WaMu), and that defendant was in breach of that contract. The complaint alleged defendant owed $14,671.10, plus additional interest.1 On September 13, defendant filed his answer, denying the alleged debt, claiming "[t]he goods or services were not received" and that he "never made charges" to the account. Trial was held on December 2.

Before any testimony, the judge inquired whether plaintiff's witness, Cynthia Sharpe, "ha[d] personal knowledge of the business records of the underlying creditor," i.e., WaMu. Plaintiff's counsel responded that Sharpe did, citing "monthly statements . . . that were furnished by [WaMu]." Defendant objected noting he was disputing only "$7,000 of the [debt]."

The colloquy between plaintiff's counsel and the judge continued regarding the admission of monthly credit card statements in defendant's name:

Judge: All right. And the existence of the underlying debt would be reflected in the business records of [WaMu]? Counsel: Yes . . . . Judge: All right. And Ms. Sharpe . . . is not an employee of [WaMu]? Counsel: [WaMu] doesn't exist anymore. . . . Judge: Well, Ms. Sharpe is not an employee of [WaMu], so how could she be the proper custodian of records for those bank records, and support the admission of the bank records under the hearsay 803 series? . . . . [T]he fact is that Ms. Sharpe is not a business custodian of [WaMu], and, therefore, she's not properly qualified to authenticate the underlying business records. The underlying business records are not authenticated, they [sic] cannot rely upon them as a hearsay exception to establish the underlying debt.

Plaintiff's counsel stated his intention to "proceed without admitting the statements into evidence," and "leave it to the defendant to introduce them into evidence." The judge responded, "He doesn't have to testify." Defendant moved for dismissal, but the judge denied the request as premature. We discern from an unrecorded recess reflected in the transcript that the parties were directed to a mediator, but the effort was unsuccessful.

Sharpe was sworn and testified that she was plaintiff's "custodian of records, and a legal adjuster." She explained that plaintiff "purchases debt," and her job was to "maintain records as they're generated throughout the course of business" and "travel with the attorneys to represent [plaintiff] as a witness."

Sharpe identified "an affidavit claim," "the assignments," and "the bill of sale" used "whenever we purchase a . . . portfolio debt." These documents were kept in the ordinary course of plaintiff's business. The judge then inquired whether Sharpe "ha[d] . . . personal knowledge of whether [defendant] ever signed a credit card or ever took out a credit card . . . from [WaMu]." Sharpe acknowledged plaintiff "d[id] not have the signature on an application." The judge continued by asking if the documents Sharpe identified were "document[s] from [WaMu]." Sharpe acknowledge they were not.

When Sharpe was questioned regarding the monthly statements, the judge interjected:

You[`re] relying upon records of [WaMu], this lady is not a custodian of records for [WaMu], so how are you going to establish the underlying debt? I assume that you can. . . show . . . an assignment from [WaMu] to Bank B to your . . . company . . . . [H]ow do you show the underlying debt with this witness?

Plaintiff's counsel claimed the "business exceptions rule" permitted admission of the monthly statements. The judge disagreed, noting, "if you don't have the custodian of records for the underlying creditor, . . . how can you prove your case?" After inquiring whether plaintiff intended to produce any other witnesses, the judge asked defendant if he "ha[d] an application for dismissal?" The judge granted defendant's motion, concluding that Sharpe "ha[d] no personal knowledge of any of the business records of [WaMu]," was "not in a position to testify as to the contents of those records," and "there [wa]s no evidence . . . to establish that . . . defendant owe[d] a debt to [WaMu]." He entered an order of judgment in defendant's favor because "plaintiff [was] unable to prove [the] underlying debt." This appeal followed.

Plaintiff's essential argument is that the trial judge erred in refusing to admit the monthly credit card statements as business records, excepted from the hearsay rule by N.J.R.E. 803(c)(6). In this regard, plaintiff contends that absent some showing by defendant that the records were not trustworthy, the statements were admissible.

"In reviewing a trial court's evidential ruling, an appellate court is limited to examining the decision for abuse of discretion." Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008). We accord "substantial deference to a trial court's evidentiary rulings." Benevenga v. Digregorio, 325 N.J.Super. 27, 32 (App. Div. 1999) (quoting State v. Morton, 155 N.J. 383, 453 (1998) cert. denied, 532 U.S. 931, 121 S.Ct. 1380, L. Ed. 2d 306 (2001)) (internal quotation marks omitted), certif. denied, 163 N.J. 79 (2000). "[I]n making relevance and admissibility determinations," the trial judge's exercise of his "broad discretion" "will not [be] disturb[ed], absent a manifest denial of justice." Lancos v. Silverman, 400 N.J.Super. 258, 275 (App. Div.), certif. denied sub nom., Lydon v. Silverman, 196 N.J. 466 (2008). However, we accord no such discretion to a ruling that is "inconsistent with applicable law." Pressler & Verniero, Current N.J. Court Rules, comment 4.6 on R. 2:10-2 (2012). "When the trial court fails to apply the proper test in analyzing the admissibility of proffered evidence," our review is de novo. Ibid.

N.J.R.E. 803(c)(6) excepts from the hearsay rule

A statement contained in a writing or other record of acts, events, conditions, and, subject to Rule 808, opinions or diagnoses, made at or near the time of observation by a person with actual knowledge or from information supplied by such a person, if the writing or other record was made in the regular course of business and it was the regular practice of that business to make it, unless the sources of information or the method, purpose or circumstances of preparation indicate that it is not trustworthy.

"The purpose of the business records exception is to `broaden the area of admissibility of relevant evidence where there is necessity and sufficient guarantee of trustworthiness.'" Liptak v. Rite Aid, Inc., 289 N.J.Super. 199, 219 (App. Div. 1996) (quoting State v. Hudes, 128 N.J.Super. 589, 599 (Cty. Ct. 1974)).

In order to qualify under the business record exception to the hearsay rule, the proponent must satisfy three conditions: "First, the writing must be made in the regular course of business. Second, it must be prepared within a short time of the act, condition or event being described. Finally, the source of the information and the method and circumstances of the preparation of the writing must justify allowing it into evidence." [State v. Sweet, 195 N.J. 357, 370 (2008) (quoting State v. Matulewicz, 101 N.J. 27, 29 (1985)), cert. denied, ___ U.S. ___, 129 S.Ct. 2858, 174 L. Ed. 601 (2009).]

However, the foundation witness need not "have personal knowledge of the facts contained in the record." Hahnemann Univ. Hosp. v. Dudnick, 292 N.J.Super. 11, 17-18 (App. Div. 1996). In Hahnemann, we noted that N.J.R.E. 803(c)(6) follows its federal counterpart, Fed. R. Evid. 803(6), such that

documents may properly be admitted "as business records even though they are the records of a business entity other than one of the parties, and even though the foundation for their receipt is laid by a witness who is not an employee of the entity that owns and prepared them." [Id. at 17 (emphasis added) (quoting Saks Int'l, Inc. v. M/V "Export Champion", 817 F.2d 1011, 1013 (2d Cir. 1987) (citation omitted)).]


A witness is competent to lay the foundation for systematically prepared computer records if the witness (1) can demonstrate that the computer record is what the proponent claims and (2) is sufficiently familiar with the record system used and (3) can establish that it was the regular practice of that business to make the record. If a party offers a computer printout into evidence after satisfying the foregoing requirements, the record is admissible "unless the sources of information or the method, purpose or circumstances of preparation indicate that it is not trustworthy." [Id. at 18 (citation omitted) (quoting N.J.R.E. 803(c)(6)).]

See also Garden State Bank v. Graef, 341 N.J.Super. 241, 245 (App. Div. 2001) (permitting employee of successor bank to certify as to the loan history printouts reflecting transactions with predecessor bank because his position "render[ed] him `sufficiently familiar with the record system used' . . . enabl[ing] him to `establish that it was the regular practice of [the successor bank] to make the record'") (quoting Hahnemann, supra, 292 N.J. Super. at 18).

Based upon the above, it was error for the trial judge to conclude that because Sharpe "[wa]s not a business custodian of [WaMu]," she was not "properly qualified to authenticate the underlying business records," or that because "she ha[d] no personal knowledge of any of the business records of [WaMu], she[] [was] not in a position to testify as to the contents of those records." In short, the basis for the judge's decision to exclude the monthly statements was "inconsistent with applicable law." Pressler & Verniero, supra, comment 4.6. R. 2:10-2.

We do not accept plaintiff's contention that because of the prevalence of bank mergers and dissolutions, "routine records" of monthly credit card statements are admissible unless some "evidence [is] proferred regarding the untrustworthiness and/or unreliability of the monthly statements." Plaintiff relies in part upon our holding in Garden State, supra, for this broad proposition.

In Garden State, the plaintiff bank's successor, Summit Bank (Summit), sought summary judgment for the balance of a construction loan note guaranteed by the defendants. Garden State, supra, 341 N.J. Super. at 243. The defendants only contested the amount due, and argued "that the best evidence rule [wa]s violated where a summary, rather than the actual accounting record [wa]s provided." Id. at 244. They "also contend[ed] that . . . Summit failed to maintain records from the outset of the loan obligation and thus could not prove a prima facie case." Ibid.

However, we concluded that the computer loan printouts showing the history of payments was a business record admissible under N.J.R.E. 803(c)(6). Ibid. In affirming the trial judge's grant of summary judgment to Summit, we noted that "[t]he authenticity of the demand note contained in the record was never disputed and [the] defendants admitted that monies were due on the loan." Id. at 245. The witness produced by Summit, its "credit manager," "certified that prior to the transfer of the note to Summit, [the predecessor bank] ran an accounting of the balance due." Ibid. The witness "provided computer printouts detailing the loan information, indicating a balance. . . as of the last review . . ., subsequent payments . . . made to [the predecessor bank], leaving a balance forward . . . when the loan was transferred to the new Summit Bank system, and an itemized list of the three payments made to Summit through the date of default." Ibid. On the record presented in this case, however, we cannot conclude that Sharpe could have provided similarly detailed information.

Plaintiff bears the burden of establishing the predicate requirements such that the computerized billing statements are admissible as a business record pursuant to N.J.R.E. 803(c)(6). Hahnemann, supra, 292 N.J. Super. at 18; see also Biunno, Weissbard & Zegas, Current N.J. Rules of Evidence, comment 2 on N.J.R.E. 803(c)(6) (2011). Thus, if the matter is tried again, plaintiff must properly authenticate the monthly statements as required by the Rule and the cases we have cited. Whether Sharpe, some other witness, or defendant, if called by plaintiff as a witness, can establish the underlying predicates making the monthly statements admissible as a business record is a question we cannot answer at this time. It suffices to say that Sharpe was never accorded that opportunity because of the judge's ruling.

Reversed and remanded for a new trial. We do not retain jurisdiction.


1. Plaintiff's complaint included four additional counts seeking recovery under other causes of action. These are not relevant to our decision.


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